Tariffs: Amazon and Canada Add to the Drama

The Canadian election and Amazon’s on-now-off tariff transparency plan added some twists in the tariff tension.

Apr 29, 2025

One man’s “hostile and political” is another man’s “factual and transparent.” Trump as the king of “seller pays the tariffs” did an N+1 attack on those who cite tariff facts. This time the target was Amazon in Trump’s latest denial of the fact that tariffs cause higher prices for consumers (i.e. the “buyer pays”). Trump went ballistic over Amazon’s plan to break out the price impact of the tariff for some products (just as car dealers will and presumably many others). Then in a not-so-shocking display of weakness, Amazon backed down per CNBC (citing an Amazon spokesperson).
On Canada’s election, “Who’s willing to stand up for Canada with me!?” was the Carney clarion call and shared by the Conservatives when the losing side also made standing up to Trump a core of its concession speech.
The reality from here is now the “pause” period adds more near-term wildcards from Canada into the equation after Trump revisited his toxic annexation ambition in a social media post on election day.
We enter this week with the new leaders of Canada refocused and free to make decisions. China and Xi not in discussions while the EU is still a work in progress with moods not helped by Ukraine talks failing and EU tariff retaliation on standby.

Amazon’s fine print pricing details annoy the tariff architects.

The White House Press Secretary was conducting a morning press conference with Bessent that was tariff focused (I was watching it live on BBC). The Amazon action sent her to the use of visual aids to show that Amazon was aligned with China propaganda machines. Nice touch. Maybe Bezos was protecting the Amazon franchise and being truthful and visible with consumers. The angry response led to a reversal of the plan, with Amazon saying, “This was never approved and is not going to happen.”

As a reminder to the capitalists out there, a click on Amazon is a free choice in a free economy to select what you want to buy at a lower cost. It is not China or Mexico “ripping us off.” Change that model to a tariff system, and that buyer no longer has that choice at that price. That makes it a tax, reduces purchasing power and – on a side note that seldom comes up – it is a regressive tax.

Tariffs are a tax that should be delineated on billings…

As a reminder, in 2017 the Ryan-Brady tag team designed a massive overhaul of the tax system to use a 20% border adjustment tax on all imports (“border tax,” aka BAT tax, was their term, but it was also a tariff). The end game of that major tax plan was to use those tariff revenues as a means of removing or dramatically reducing corporate taxes. The proposal was dropped immediately by the Senate and derided by numerous GOP senators. Many of those same GOP Senators have since been deboned by Trump and will not call these tariffs a “buyer pays tax.”

The Senate changed the framework to a record tax cut for personal and corporate taxes that was the crown jewel legislation of Trump 1.0 signed in Dec 2017. The bottom line is that the BAT tax was called a tax by the GOP then and it is still a tax now.

The cornerstone theory of the BAT tax from the hired gun professor who supported it in legislation was that the dollar would be so strong in reaction that the cost to the buyer in the US would be minimal. After all, the “buyer pays” even if Trump will not use those words and has banned them for his political supporters. Why would Ryan-Brady and that professor even bring up the dollar issue if the seller paid? In terms of the dollar trend offset to the tariff, that Professor just flunked his own course given the dollar trends in 2025. He just got schooled again on unintended consequences. The “buyer pays tariff” totals in 2025 to this point are higher in dollar terms – not lower.

It keeps getting stranger on tariff rhetoric and spin. During the press conference, Bessent cited the value of “strategic uncertainty” in negotiation. The idea is that it offers room to maneuver. An empirical (and unfriendly) translation might be, “keep them off balance with poor preparation, embrace inconsistency, change your story on the fly, avoid analytical rigor, abandon facts and concepts, evade specifics, and just say it louder.”

In the end, transparency and facts are the enemy of “strategic uncertainty.” It can backfire when the market and voters feel they were lied to. The “seller pays” representation is factually false unless it is built into a contract. What Amazon was initially doing was being factual and honest and transparent with consumers. Only this crew in Washington calls the truth “hostile and political.” Amazon did what many companies do these days, which is surrender to centralized political attacks.

Canada: time for deep breaths and new leadership responses on tariffs?

While the Liberals clearly won and the Conservatives lost, the election as we see the numbers so far was in no way a landslide. The Liberals did not get a majority and just missed (I can’t wait to see Trump address their failure to get a majority). The most spectacular aspect of the Canadian election was the speed and magnitude of the reversal of fortunes in the Conservatives vs. Liberals rather than the total vote mix and margin. Trump’s rhetoric was the catalyst.

As we go to print, we see a 43.6% vote share for the Liberals and 41.4% for the Conservatives with the seat count at 154-131 (172 of 343 is needed for a majority). The Bloc Quebecois is at a very distant #3 with 21 seats at this point. Liberals picked up votes in Quebec, but Conservatives did better than they have done in a long time in Ontario. The fact that Liberals were so far behind and mounted this comeback was one for the ages. It was not their economic record. The screaming headline consensus was Trump, the tariffs, and his attacks on Canadian sovereignty were the overriding factors.

We have always liked reading the Globe and Mail and Financial Post for the autos, energy, and natural resources connection (maybe someone can explain to Trump what potash is along with the difference between recoverable reserves and oil production). The color from Canada in the coming days will be important to watch given the disjointed nature of federal vs. provincial policy decisions.

There is a wide range of views on how aggressively to respond to the Trump attacks on Canada. The question is “Can they organize an effective tariff response?” If Trump keeps threatening them, their tariff response can in theory be more effective and impactful, but a plan of using a waiting game during the pause and seeing how China and the EU moves play out is one strategy. Whether Trump forces their hand is no small factor.

With the de facto trade war (right now is a border clash) soon to get underway between the US and Canada, the voiced desire of Trump to apply economic coercion in the interest of annexation make this clash about a lot more than trade. On election day, he blasted out another annex Canada diatribe. Trump should probably read some history of Canada in WWI, WWII, and Korea. He tends to ignore such reading ever since he assumed the fetal position under Daddy’s desk in 1968. As allies of the US across those challenging moments in history, they deserve more respect. Canada was in WWI and WWII for years longer than the US was.

Tariff and Trade links:

Ships, Fees, Freight & Logistics Pain: More Inflation? 4-18-25

Tariffs, Pauses, and Piling On: Helter Skelter 4-11-25

Tariffs: Some Asian Bystanders Hit in the Crossfire 4-8-25

Tariffs: Diminished Capacity…for Trade Volume that is…4-3-25

Reciprocal Tariff Math: Hocus Pocus 4-3-25

Reciprocal Tariffs: Weird Science Blows up the Lab 4-2-25

Tariffs: Stop Hey What’s That Sound? 4-1-25

Tariffs are like a Box of Chocolates 4-1-25

Auto Tariffs: Questions to Ponder 3-28-25

Fed Gut Check, Tariff Reflux 3-22-25

Tariffs: Strange Week, Tactics Not the Point 3-15-25